Why eBay is Suspending Loyalty Affiliates

Posted on8 CommentsCategoriesAffiliate Program Management, General Discussion

Yesterday, in The Ugly Side of Affiliate Marketing post a friend and fellow affiliate marketer, Tricia Meyer wrote:

The eBay Partner Network announced out of the blue that they are dropping loyalty sites until at least October.

The question this immediately raised in multiple heads was, of course, “why?”

Carolyn Tang Kmet, adjunct lecturer in the Marketing Department of Loyola University Chicago and director of affiliate marketing at Groupon, wrote in the comments to Tricia’s post:

Did eBay give any kind of explanation for what they did? Are they trying to test their own loyalty program?

Interesting train of thought. This was one of the first things I also started thinking about. But no, it doesn’t seem that that’s where they’re going with this.

A few hours ago AuctionBytes.com posted some clarification from eBay Partner Network‘s head for the U.S., JJ McCarthy. who explained the move as a provisional step “as the company reassesses the business value of its cash-back programs”. McCarthy said:

One of the challenges associated with running a large-scale affiliate program is understanding the incremental value of each individual partnership… In recent weeks, we have been studying our cashback and loyalty publisher segment in detail in order to feel more comfortable with the ROI we are receiving from those partnerships. After careful analysis and thorough internal debate, we decided that the only way to gain a definitive (quantified) understanding of the value of these partnerships is to conduct a “go dark” test.

While we understand that administering such a test in the live environment will create hardship for our Loyalty partners and their users, we feel this is a necessary step in order for us to maintain our confidence in this marketing method. The goal of this exercise, in the end, is not to reach a binary decision between continue/discontinue this form of partnerships, but rather to quantify the incremental value of these partnerships and to price them properly so that we can all continue working together with full confidence going forward. [source]

So, it’s a “go dark” test the goal of which is to “quantify the incremental value of these partnerships and to price them properly”; which, in its turn, seems to be in line with eBay’s whole Quality Click Pricing model/idea.

8 thoughts on “Why eBay is Suspending Loyalty Affiliates

  1. Recently I conducted a research on our loyalty affiliates. I gave a presentation on a Dutch affiliate conference which you can find here: http://slidesha.re/k0OuKv (Dutch)

    I did a qualitative and quantitative research:
    – all orders of 2010 analysed
    – 100K orders in Omniture analysed
    – A questionnaire which was filled in by 1241 consumers (95% reliability rate)

    I had two important questions:
    1. Does a cooperation with loyalty affiliates lead to a higher loyalty of our customers
    2. Are loyalty affiliates able to push promotions and persuade consumers to buy the promotions.

    Conclusion in short:
    1. We see that customers who are buying via loyalty affiliates buy more often, more items per product and have higher order values. Besides that we see that customers who are buying via loyalty affiliates for a larger part can be classified as top, gold and silver customers. Also we see that customers that are buying via loyalty affiliates are less churn inclined. BUT 58% of our respondents said that if bol.com would stop working with loyalty affiliates this would not influence there buying behaviour. So more research needs to be done. For example: we can look at the behaviour of new customers which came via loyalty websites compared to new customers which came via other channels. The method of eBay is also a method 🙂

    2. Our questionnaire showed that more than half of our respondents have said that if the buy via a loyalty affiliate they know which product they want to buy at which store. Also we see that during 2010 most of our e-mailings we have send via loyalty affiliates did not generate higher revenues in the product groups that we are communicating in the mailings. So the conclusion is that loyalty affiliates as of today are not able to really push promotions.

    So, I think it is a bold move of eBay to temporarily stop cooperation with loyalty affiliates. But is definitely one way of looking at what customers will do now. If you see that customers are still buying at eBay than you can question the added value of loyalty affiliates.

  2. Any company that employs a Click Quality Scoring Program should NOT have to go dark. Makes little sense. I’ve seen that our own program does it and with mixed results. Why go dark unless you TRULY believe you could do without those partners. I would not expect EPN to bring you back.

    The concern for me is that they are looking at all programs individually rather than as a whole. Either they find it conflicts with their own model and plans or they might have a few bad apples.

    1. It would make complete sense if it conflicted “their own model and plans”. But earlier this month eBay announced that they’re ending eBay Plus (their UK shopping rewards program). Interestingly enough, upon doing some more digging, I’ve found out that they do have a cashback program in the USA. And loyalty affiliates are obviously in direct conflict with it. The program is called eBay Bucks, and it is a U.S. consumer reward program whereby shoppers get 2% cashback on most purchases if paid via PayPal (more here). Is that our answer?!

  3. I just linked to this article from the Sunshine Rewards forum so that my members can hear from someone else what is going on and why (although I already gave them my spin). Across the board the responses in my forum have been that people will try to find other places on Sunshine Rewards to buy what they want and only use eBay now as a last resort. In addition, we will no longer be pushing their Daily Deals to our community, which used to resort in a fair number of sales.

    1. Tricia, thank you for the link, and once again, sorry this has happened to you. Have they let you open a separate account for your other (non-loyalty) sites, at least?

  4. I submitted my other sites for a new account a couple of days ago. I went through the verification process but so far it has not been approved. As of tomorrow, I will have to take all links down from my niche sites as well if they do not approve me today.

    As for the eBay Bucks, they have been doing those for awhile. But it’s not unusual for merchants to do those and also allow rewards sites to give incentives. For example, drugstore.com and Football fanatics have been doing it for as long as I can remember.

    1. Gotcha on both points, Tricia.

      It seems that if eBay sees this move result in a substantial increase of signups for (and sales through) their own rewards program, they may never bring loyalty affiliates back. I guess, time will only show.

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